Brazil to End Energy Rationing March 1 - 2002-02-19

The Brazilian government is ending an eight-month energy rationing program on March 1 as rainfall has replenished water levels in reservoirs that power the country's hydroelectric plants. The energy crisis hurt the Brazilian economy but was unavoidable.

March 1 marks the end of electricity rationing in Brazil, which obliged Brazilian residential and business consumers to reduce energy use by as much as 20 percent.

Those who did not comply faced stiff fines and service cutoffs.

President Fernando Henrique Cardoso imposed the strict rationing program last June after a prolonged drought seriously affected the water levels in the country's main reservoirs that power Brazil's hydroelectric plants. Ninety percent of Brazil's electricity is generated by these plants.

In recent months, rainfall has replenished water levels, leading the Cardoso government to ease some restrictions.

On Tuesday, the head of Brazil's Energy Emergency task force, Pedro Parente, announced the end of the rationing program. Mr. Parente said the decision was based on what he described as very "conservative" assumptions about future energy production and consumption, and on weather projections that there will be enough rain this year to keep reservoir water levels high. But he told reporters there are no guarantees.

"Based on these assumptions we will pass through 2002 and 2003 without the need for any rationing, but in a system that depends on nature you can never guarantee 100 percent that there will never be problems," he said. Mr. Parente, who is also President's Cardoso's chief of staff, added that the emergency task force has developed a better system to monitor the country's energy situation.

Some Brazilian energy analysts warn the government is lifting the rationing program too soon. Energy expert Mauricio Tiomno Tolmasquim of the Federal University of Rio de Janeiro says Brazil's reservoirs have enough water to power hydroelectric plants in 2002, but may run short in 2003 especially if there is a drought. Other analysts say more investment is needed in the energy sector to prevent future crises.

The rationing program and energy shortages seriously affected the Brazilian economy. In the first six months of last year, industrial production grew by five percent. But in the second half, industrial production fell by almost two percent in large part, economists say, because of the energy crisis. For the year, Brazil's industrial production grew by only 1.5 percent compared to just over 6.5 percent in 2000.